The Effects of Minimum Working Hours : Theory and Evidence

Pauline Carry

This project studies how firms respond to the implementation of a floor for hours of work. In 2014, the French government introduced a minimum work week of 24 hours in order to reduce involuntary part time employment. As a result, a job with less than 24 hours per week cannot be created unless the worker asks explicitly for that. Before the reform, 19% of jobs were below the 24h-threshold, which suggests that the bite of this policy is particularly important. The objective of this project is to estimate the employment effects of the implementation of minimum working hours in France. I will quantify the impact on 1) the extensive margin (number of jobs in the firm), 2) the intenvive margin (hours per job) and 3) total hours worked. Men and women have different distributions of hours worked. As a result, an important aspect of the project will be the focus on the heterogeneity of the effects between men and women.

The researcher plans to combine reduced-form estimates and structural estimation in order to measure the effects of the policy at the firm-level and the aggregate impact. First, at the firm level, she relies on linked employer-employee data and an event study design to assess the employment effects of the policy. Preliminary results suggest that the reform reduced both hires and the number of workers in the firm and increased average hours worked. Overall, total hours worked in the firm decreased significantly. Second, she finds that the negative effect on employment is two times larger for women as compared to men. This results from both a strong decrease in part time employment for women and a stronger increase in full time employment for men. These findings suggest that firms tend to substitute men working full time for women working less than 24 hours.

In order to account for both the firm-level impacts and the indirect reallocation, she plans to estimate a structural model that will allow her to quantify the macro impact of the reform. The framework is a search and matching model with heterogeneous workers and heterogeneous large firms. The model allows for within- and between-firm heterogeneity in hours worked. The model predicts positive general equilibrium effects on employment and reallocation patterns that benefit more to men. The estimation of the structural model will allow to quantify the overall impact of the reform on employment, to conduct a welfare analysis and simulate alternative policy conterfactuals.

Membres du projet :

  • Pauline Carry, CREST-ENSAE

État du projet : en cours

Ce projet est financé par la chaire Sécurisation des Parcours Professionnels.